Lakhwinder Singh Dhillon, 47, found the money in bundles of 10,000 Australian dollars after dropping off a group of people at Crown Casino last month.
Mr Singh said the seven men and two women, whom he picked up from Chinatown in his cab, seemed quite drunk.
"When I saw all that money, I thought, what is happening, it is something amazing, what I should do," he said.
Mr Singh decided to inform the police, but soon received a call asking him to return the money to the passengers who were at the casino, the Herald Sun reported.
"They gave me a 500 Australian dollars reward. One of them said: 'You're very honest, you're a very good man, you've helped us a lot'," Singh said.
Mr Singh was presented a Certificate of Commendation by Melbourne's Mayor Robert Doyle at the Melbourne Awards.
"He is truly an inspirational Melburnian- it was the act of an honest man of integrity," Doyle said.